Essar Oil must pay before it gets relief: SC

The Supreme Court, on Tuesday, told Essar Oil Ltd that once it pays the first instalment of Rs 1,000 crore to the Gujarat government as the sales tax liability of Rs 6,300 crore, coercive action taken by the Gujarat government against it will be stayed. The firm told the court that it had offered to pay its liability to the Gujarat government in installments, the first of which would be deposited by 30 July.

The company made the submission before a bench comprising the justices A K Patnaik and Madan B Lokur. The bench said that any other issue would be considered on the next date of hearing on 31 July, when Essar Oil counsels raised the issue of waiving the interest on the amount in the apex court.

Essar Oil had approached the Supreme Court against the order of the Gujarat high court, which had refused any relief to it for making the payment in installments.

Essar Oil had availed Gujarat government's Capital Investment Incentive to Premier/Prestigious Unit Scheme, 1995-2000, for its Rs 1,900-crore Vadinar plant in Jamnagar district as a 100 per cent export-oriented unit for refining of petroleum products with a capacity of nine million tonnes per annum. The state government had introduced the said scheme to accelerate development of the backward area of the state and to create employment opportunities. The operative period of the said scheme was from 16 August 1995 to 15 August 2000, during which new units had to go into commercial production. The scheme envisaged grant of sales tax incentives by way of sales tax exemption or sales tax deferment or composite schemes for Premier/Prestigious Units according to the location, investment and status of the project. Essar fell in the category of premier unit.

The Supreme Court, earlier this year, had quashed the Gujarat high court's order allowing Essar Oil to pay Rs 6,300 crore sales tax liability in deferred installments and extended the time period of the state government's tax incentive scheme. The Gujarat government had approached the Supreme Court against the high court order. The Supreme Court had said that the Essar Oil would no longer be eligible for a programme that had allowed it to defer paying about Rs 6,300 crore in sales taxes to the Gujarat government until 2021.
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